Bombardier, Inc.: Is This Stock a Buy Today?

Bombardier, Inc. (TSX:BBD.B) is up 33% this year, and investors are wondering if more gains could be on the way. Let’s take a look at the current situation to see if the plane and train maker deserves to be in your portfolio. CSeries program Bombardier has endured some difficult times over the past few years, and most of the pain is connected to the company’s CSeries jets. The program ran into extended delays and cost overruns in excess of $2 billion, forcing Bombardier to seek finacinal assistance from the Quebec government and the province’s pension fund. The…

To keep reading, enter your email address or login below.

Register by giving us your email below to continue reading all of the content on the site. Also receive a free Email Newsletter from the Motley Fool. (You may unsubscribe any time.)

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls.
I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.

Bombardier, Inc. (TSX:BBD.B) is up 33% this year, and investors are wondering if more gains could be on the way.

Let’s take a look at the current situation to see if the plane and train maker deserves to be in your portfolio.

CSeries program

Bombardier has endured some difficult times over the past few years, and most of the pain is connected to the company’s CSeries jets.

The program ran into extended delays and cost overruns in excess of $2 billion, forcing Bombardier to seek finacinal assistance from the Quebec government and the province’s pension fund.

The investments of US$2.5 billion stabilized the balance sheet and helped Bombardier secure two key deals last year, including one from Delta Air Lines, which has caused some concerns in the United States.

What’s up?

Boeing filed a complaint about the Delta deal, accusing Bombardier of using government aid to help it sell the planes at significant discounts. In response, the U.S. Commerce Department has levied duties of about 300% on Bombardier’s CSeries jets.

This led to the recent announcement of a 50.1% purchase of the CSeries business by Airbus. The move is designed to thwart the tariffs as the CSeries planes targeted for delivery to U.S. customers will be made in the United States at Airbus facilities located in Alabama.

New orders

Bombardier has struggled to win a large CSeries order since the Delta deal, but that is expected to change now that Airbus is a majority owner of the program.

In fact, the company says it has received a letter of intent for 31 CSeries jets from a European customer.

Ongoing challenges

Bombardier is still facing challenges. The company just scaled back its expected CSeries deliveries for 2017 from 30 to as low as 20 due to issues with its engine supplier.

In addition, the rail division is struggling to meet delivery targets on some high-profile contracts and is facing tough global competition from Chinese players.

Cash burn for 2017 is now expected to be about $1 billion, which is at the high end of Bombardier’s previous forecast.

Should you buy?

New investors should be careful chasing the rally.

Bombardier is making progress on its turnaround efforts, and the CSeries has the potential to be a major success, especially with Airbus on board, but I wouldn’t back up the truck right now, given the ongoing production issues.

Investors who had the courage to buy Bombardier at a much lower price might want to book a bit of profit while the stock is catching a tailwind.

While conflict overseas is all media talking-heads seem to mention these days, the billionaire founder of Tesla is losing sleep over what he sees as a far bigger threat.

Elon Musk Warns: This has “vastly more risk than North Korea”

If you missed your opportunity to get in on Google, Microsoft, or Amazon in their early days, don't let it happen again. This emerging technology trend could offer a second chance for anyone who wishes they took part in these millionaire-maker stocks.

Fool contributor Andrew Walker has no position in any stock mentioned.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.

[WATCH LIVE]

Our “Finding 10-Baggers” presentation is now broadcasting as we speak!

Just click the button below to join the event immediately – already in progress!

In it, our Motley Fool Canada team reveals the “missing link” between 95.83% of the 10x Motley Fool U.S. winners… as well as what we consider the best way to unearth the NEXT stocks that stand to offer that kind of potential upside.

You won’t want to miss short-time-only presentation, which you can join by clicking the button below!